Question

Josh Collins plans to buy a house for $245,000. If that real estate is expected to increase in value by 7 percent each year, what will its
approximate value be six years from now? Use Exhibit 1-A. (Round time value factor to 3 decimal places and final answer to the

nearest whole number.)

Approximate value

Answer 1

Using an exponential function, it is found that it's approximate value six years from now will be of $367,679.

What is an exponential function?

An increasing exponential function is modeled by:

$A(t) = A(0)(1 + r)^t$

In which:

• A(0) is the initial value.

• r is the growth rate, as a decimal.

In this problem:

• Josh Collins plans to buy a house for $245,000, hence $A(0) = 245000$.

• That real estate is expected to increase in value by 7 percent each year, hence $r = 0.07$

Then:

$A(t) = A(0)(1 + r)^t$

$A(t) = 245000(1 + 0.07)^t$

$A(t) = 245000(1.07)^t$

In six years, we have that $t = 6$, hence, the value will be of:

$A(6) = 245000(1.07)^6 = 367679$

You can learn more about exponential functions at brainly.com/question/25537936